July 29 (Bloomberg) -- Israel intensified its attacks
against Gaza after Prime Minister Benjamin Netanyahu told his
country to brace for an extended military campaign and said any
truce must be based on disarming the Hamas Islamist movement
that runs the territory.

“The process of preventing the arming of terror
organizations must be part of any solution, and the
international community must demand this aggressively,”
Netanyahu said in a televised address late yesterday. “We must
be ready for a long operation.”

Israeli stepped up its shelling of Gaza overnight as the
buzz of drones filled the air and the ground in Gaza City shook
from explosions every few minutes. A media complex housing the
offices of Hamas-run Al Aqsa television and radio suffered two
major explosions, and an Israeli plane fired a missile at the
home of Hamas Gaza leader Ismail Haniyeh, without causing
casualties, Associated Press reported.

The third major military showdown between the sides in less
than six years has claimed the lives of more than 1,050
Palestinians and 50 Israelis during three weeks of fighting.
Previous truce deals failed to prevent the proliferation of arms
in the Gaza Strip or meet Hamas’s demand that Israel end its
blockade of the territory, which was initiated in 2006.

International Pressure

The Israeli military has killed hundreds of Palestinian
civilians, fueling international pressure on Netanyahu to end
Israel’s incursions into Gaza. Among those killed yesterday were
10 Palestinians, some of them children, who died in disputed
circumstances at a Gaza hospital and a park.

Gaza Health Ministry official Ashraf al-Qedra said the
Palestinians died in Israeli air strikes on outpatients’ clinics
at Shifa hospital in Gaza City and a park in the Shahti refugee
camp. Most were children, he said. The Israeli army said
fatalities at both sites were caused by militant rockets that
fell short.

Four Israeli soldiers were killed by mortar fire along the
border, the military said in a statement. A fifth soldier was
killed during operations in southern Gaza.

Israel says its campaign is intended to quell rocket fire
and destroy tunnels that militants have dug into Israeli
territory. Gaza fighters have launched more than 2,500 rockets
during the conflict and Israeli forces say they have discovered
around 30 underground passages, including one used to slip into
Israel yesterday. Israeli troops killed one infiltrator in a
gun-battle, the army said.

Evacuating Homes

“The operation against the tunnels is the first and an
imperative step in demilitarizing Gaza,” Netanyahu said.

Defense Minister Moshe Ya’alon, who spoke after Netanyahu,
said the military was continuing to attack targets in Gaza.
Earlier, it dropped leaflets from the air and sent phone
messages to Palestinians living in one Gaza City area to
evacuate their homes.

President Barack Obama called Israeli Prime Minister
Benjamin Netanyahu on July 27 to urge “an immediate,
unconditional humanitarian cease-fire.” Added pressure came
yesterday from the United Nations. The Security Council also
called for an “immediate and unconditional truce” and
Secretary-General Ban Ki-moon told reporters he telephoned
Netanyahu to press for a cease-fire.

Economic Embargo

The prime minister said the council statement doesn’t
provide for Israel’s security and favors Hamas by not calling
for the demilitarization of Gaza, according to a text message
from his office. Israel, the U.S. and the European Union label
Hamas a terrorist group.

Hamas leader Khaled Mashaal, in a PBS interview with
Charlie Rose, said the war shows the need to “lift the siege of
eight years,” referring to the economic embargo. He also said
that to stop the bloodshed “we need to look at the underlying
causes. We need to look at the occupation” of Palestinian land
by Israel, according to e-mailed excerpts.

Both Hamas and Israel rejected a cease-fire plan proposed
over the weekend by U.S. Secretary of State John Kerry. In
Washington yesterday, Kerry said the U.S. continues to work
toward a short truce, in the hope that it would pave the way for
a more lasting peace. “Any process to resolve the crisis in
Gaza in a lasting and meaningful way must lead to the
disarmament of Hamas and all terrorist groups,” he said.

End of Ramadan

The calls for a break in hostilities came as Gaza’s 1.8
million people began observing Eid al-Fitr, the three-day
holiday marking the end of the Muslim fast month of Ramadan.

In more peaceful times, streets would be bustling and the
atmosphere would be festive, with adults and children dressed in
holiday finery and visiting relatives. Parks and beaches would
be packed.

Yesterday, streets were almost empty in Gaza City, the
territory’s biggest urban area, as people visited fresh graves,
bouquets of flowers in hand, paid hospital calls on family and
friends wounded in the fighting, and surveyed the damage done by
the Israeli strikes. The Eid is usually the best season for
business in Gaza, yet this year, many shops were closed.

“This isn’t Eid, it’s the worst Eid I’ve seen in all my
life,” said Mohamed al-Ejla, a 45-year-old father of seven. “I
still remember the Eid when I was young, it was full of
happiness and we enjoyed it. But this Eid is full of blood,
destruction, pain, grief and sadness.”

While the military operation has barely affected Israel’s
markets, the Bank of Israel cited the conflict in its surprise
rate cut yesterday, though it said it was too early to tell the
economic effects of the security situation.